London, 12 November 2009 

Nothing illustrates technology's power to transform the energy outlook more clearly than the development of the Barnett shale gas deposit under the city of Fort Worth in Texas. The resulting increase in U.S. gas output has made a decisive contribution to the "unexpected boom" in North American gas production and the emergence of a worldwide "gas glut," cited by the International Energy Agency (IEA) in its World Economic Outlook (WEO). 

It may be hard to remember now, but it is less than five years since the Hirsch Report, prepared for the U.S. Department of Energy, warned that previous optimism about gas supplies "turns out to have been misplaced" and "supply difficulties are almost certain for at least the remainder of the decade."

"Gas production in the United States now appears to be in permanent decline," according to senior analysts cited in the report. Hirsch urged policymakers to learn lessons from "peak gas" and be ready to deal with the disruption caused by "peak oil"

http://www.netl. doe.gov/publications/others/pdf/oil_peaking_netl.pdf.

Instead, dry gas production has soared from 18.5 trillion cubic feet (tcf) in 2005 to 20.4 tcf in 2008, and is on course to hit 21 tcf in 2009 (the highest since 1973-74).

Much of the surge has come from rapid growth in shale gas. While total U.S. gas production rose 1,288 billion cubic feet ( bcf) between 2007 and 2008 (6.7 percent), the shale component leapt by 838 bcf (70 percent) and accounted for two-thirds of total growth.

Barnett & Other Plays 

Shale resources are enormous. Proven reserves stood at 32.8 tcf in 2008, according to the U.S. Energy Information Administration ( EIA). But the total recoverable resource is estimated AT 600-750 tcf, distributed widely across the continental United States.

http://www.netl.doe.gov/technologies/oil-gas/publications/EPreports/Shale_Gas_Primer_2009.pdf

Several big shale plays are being developed, including Marcellus in the Northeast and Appalachia; Fayetteville in Arkansas- Oklahoma; and Haynesville in northern Louisiana.

But the biggest development has been Barnett in North Texas.

http://www.eia.doe.gov/oil_gas/rpd/shale_gas.pdf

Barnett production soared from 380 bcf in 2004 to 1,563 bcf in 2008, according to the Texas Railroad Commission (TRC) which regulates the industry, and is still climbing.

Between 2007 and 2008, increased output from Barnett (481 bcf) accounted for more than a third of the increase in all natural gas production nationwide. Barnett's development is probably the single most important factor confounding predictions of a gas peak.

It is not even the largest potential play (Marcellus and Haynesville are each thought to have more than five times as much recoverable gas). Barnett was merely developed first. The IEA has called it the "birthplace of the revolution."

What makes Barnett extraordinary is that the counties at the play's "core" (Wise, Tarrant, Johnson and Denton) include some heavily built up urban areas, including a part of the Dallas-Forth Worth metroplex. Vast quantities of gas are being extracted from directly beneath a city.

Barnett had a total of 12,135 wells at the start of September 2009 according to the TRC.

http://www.rrc.state.tx.us/data/fielddata/barnettshale.pdf

Many were drilled in urban environments.

http://www.barnettshalenews.com/photos/gw13.htm

Technology Challenges 

Extracting gas from shale presents formidable technical challenges:

(1) Shale formations and gas resources are widely distributed (so the risk of drilling a completely dry well is lower) but the gas is less concentrated than in conventional fields (so many more wells have to be drilled to obtain the same amount of gas).

(2) In a conventional oil or gas field, hydrocarbons are held in a porous reservoir rock and "flow" to the bottom of the well, initially under natural field pressure, later supplemented by the injection of water or other fluids to maintain as natural pressure falls. But shale is not porous so gas does not naturally flow towards the well.

In fact, shale is so impermeable it often forms the "cap" over the top of conventional gas and oil reservoirs that prevents conventional hydrocarbons escaping to the surface and allows them to be recovered in commercial quantities.

In some instances, the "new" shale fields actually lie on top of conventional gas and oil reservoirs. Wells have already been drilled down through the shale to access the conventional gas and oil beneath.

(3) Shale production brings vast amounts of briny water to the surface which must be disposed of without ruining local drinking water supplies.

(4) Because of the low gas density and porosity, shale plays need at least 10 times the number of wells as a conventional gas field, drilled more closely together. A much larger surface area is affected by drilling and production operations.

Crucial Breakthroughs 

It is the technological solutions to these problems, only become widely available in the last decade, that have enabled exploitation of the Barnett shale:

(a) Horizontal drilling and wells, widely deployed in the oil industry from 1990, enable shale gas wells to come into contact with a much larger volume of rock, offsetting lower concentrations of gas in the shale. The horizontal well section will often extend for 5,000-7,000 feet underground.

(b) Multiple wells can now be drilled from one surface pad to minimise the project's footprint. One of the leading Barnett developers, XTO Energy, will have up to 30 wells originating from a single pad.

(c) Hydraulic fracturing -- pumping large volumes of a water- based fluid with sand or other particles suspended within it at high pressure down the well -- creates a myriad of small cracks in the shale and holds them open long enough for some of the trapped gas to flow to the well. The pumped fluid, under tremendous pressures of as much as 8,000 pounds per square inch, is enough to crack the shale as much as 3,000 feet in each direction from the wellbore.

(d) Original fracturing technology used huge quantities of fluid and proppant particles, which had to be carried by truck to the site. But advances since 1997 have cut the volume of proppant by 90 percent.

http://www.slb.com/media/services/resources/oilfieldreview/ors06/aut06/producing_gas.pdf

(e) Produced brine is now being injected thousands of feet underground into deep rock formations below the shale layers and far below the drinking water aquifers.

Transformative Impact 

It took 15 years to drill the first 300 wells in the Barnett shale (1981-1996). As late as 1999, there were only four horizontal ones. By 2007, there were 7,500 wells, including more than 3,200 horizontal ones. Much of the expansion was stimulated by the surge in U.S. natural gas prices between 2003 and 2008, which saw spot futures prices rise from $3 per million British thermal units (Btus) to well over $8 for much of the time and at points over $10. But shale plays are feasible (including a 10 percent return on capital) at wellhead prices of as little as $3- 6, according to the IEA.

So far, significant development has been confined to North America. But there are large resources in China and Central Asia as well as smaller ones in Europe (Hungary, Poland, Germany, Austria, the Netherlands and France). Technologies pioneered on the Barnett are now expected to fan out to other plays in the United States and abroad, opening up huge new quantities of energy.

Horizontal drilling and fracing techniques implemented on Barnett are directly responsible for reordering the North American and global gas industry.

In large part, they account for the gas glut, the stranding of North America's LNG terminals, and pressure on the gas-oil link in Europe. They have also ensured enough gas is available for it to be spoken of as the cleaner-burning "bridge fuel" until other emissions-reducing technologies become available.

Relatively small and apparently mundane technical breakthroughs have changed the gas industry utterly in just five years -- a point worth keeping in mind when listening to the peak-oilers, or reading the IEA's 20-year projections for world energy production.

Ends --

By John Kemp, Reuters columnist. The views expressed are his own